NEWSFLASH : OECD’s Tax transparency award for Luxembourg

On 30 October 2015, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes (“GFT”) has stated that, in accordance with peer reviews of its member jurisdictions, it considers Luxembourg to be “largely compliant”.

Luxembourg now shares the same highest rating in tax transparency as the United States, the United Kingdom, Germany, Italy, the Netherlands and 40 other countries out of 80 who already passed the Phase I and Phase II peer reviews.

In November 2013, the GFT considered that Luxembourg was compliant with the OECD international standards in tax transparency’s Phase I which relates to legal and regulatory aspects of information exchange.

However, at that time, the GFT did not consider that the standards of Phase II, consisting in implementing concrete measures for exchanging information, were met in practice yet.

Since then, the path to get this highest rating from the GFT has been intense and rewards the Luxembourg Government for its continuous efforts in getting more than a “compliant” status in terms of international standards on tax transparency.

These efforts were, inter alia, materialized in 2013 with the signing of the OECD convention on Mutual Administrative Assistance, the early participation into the opening of joint discussions around the OECD Base Erosion and Profit Shifting project, in 2014 with the abolition of the bank secrecy so as to allow mandatory exchange of information, the signing of the FATCA Intergovernmental Agreement, the early adoption of the OECD Common Reporting Standard, and, finally, in 2015 with the mandatory exchange of information on tax rulings (to be effective in 2017), initiated under the Luxembourg EU Presidency.

Within the current tax environment, and after a certain stigmatisation against Luxembourg with regard to tax matters, this recognition from the GFT is restoring Luxembourg’s reputation and allows the country to operate on a same level playing field with major tax jurisdictions.

This high rating from the GFT coupled with the Luxembourg strong and friendly business environment should put Luxembourg on the top of the financial and tax preferred jurisdictions’ list.